Proposals to jail reckless bankers

Senior bankers should be personally responsible for malpractice, with a new criminal offence of reckless misconduct in the management of a bank that carries a custodial sentence, the Banking Commission has concluded in its final report.

The City of London Corporation welcomed the Parliamentary Commission on Banking Standards report, saying it has put forward "some sensible suggestions" on incentives, improved accountability and increased competition.

View from Greenwich Park across to Canary Wharf and the City of London. Credit: David Davies/PA Archive/Press Association Images

Policy chairman Mark Boleat said: “It is important, however, to note that much work has already been done in this area and the impact of past reforms should be properly assessed before more changes are introduced.

"What the banking sector needs is clarity and certainty from policymakers over the future shape it will be required to take in coming years.

"The City Corporation stands ready to help facilitate dialogue to explore how to implement these recommendations”.

The Government also came under heavy fire for "political interference" in RBS. Credit: PA Wire

Radical plans to split Royal Bank of Scotland (RBS) into a "good" bank and a "bad" bank must be looked at immediately as part of an urgent rethink of Government plans for privatisation, according to an influential Parliamentary commission.

In its keenly-awaited final report, the Commission on Banking Standards stopped short of recommending a full break-up of RBS, but said the option must be considered as it warned current plans to return RBS to the private sector risked being "insufficient".

The Government also came under heavy fire for "political interference" in RBS and fellow state-backed lender Lloyds Banking Group, with the report calling for the body in charge of managing the taxpayer stakes to be scrapped.

This is as an important step towards improved regulation of the financial services sector, and I welcome its focus on good governance, accountability and responsibility.

I've always asserted that where there is wrongdoing it should be rooted out and punished. Equally we need the City to remain competitive, and this report provides a framework that strengthens standards and secures trust without destroying competition.

We should applaud the fact that the UK is leading the world on this, but we should be mindful of the need to bring other global financial centres with us on the journey toward better regulation - not light touch, not heavy handed, simply better.

A Treasury spokesman said the report was a "very impressive piece of work".

There are many recommendations in it which will help the Government's plan to create a stronger and safer banking system.

This comprehensive report, produced in less than a year, vindicates the judgment that a parliamentary commission would be swifter and more appropriate than a lengthy public inquiry that others proposed at the time.

He said the Government will support legislation where it is needed, and will amend the Banking Bill currently before Parliament to ensure changes are quickly enacted.

The Government publicly welcomes the Commission's recommendations on increased personal responsibility, especially at a senior level, increased professional judgment by regulators, and better functioning markets.

We will now get on with a swift response and will report before the summer recess.